Business Ethics Case Study

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Requirement

Business Ethics Case Study: Organic Tea Products Ltd

Solution

Introduction

In today’s world, all the businesses are focused on the impacts of the business operational activities. Due to high attention being paid to the ethical concerns, almost all the organizations are busy in promoting their social values so as to attain competitive advantage (Carroll 1999). Therefore, all the businesses are embracing the corporate social responsibility in almost all the functions. 
This report aims to examine the background and development of business ethics. Then it will provide insights to the various ethics required in the organizations and these organizations should learn to develop the ethical values in their culture. The report will further examine how the ethical stance can impact the functionality of the business and will identify various implications associated with business ethics in their functional activities. The report will then go on discussing the ethical stance of an individual as per his moral relationship with the coworkers. Further the various opportunities regarding the business response towards the ethical response along with developing a strong understanding in relation to the business ethics in various organizations. 

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Discussion

1. Define business ethics.

The business ethics is the study where the business follows proper set of policies and practices related to the potentially controversial issues like insider trading, corporate governance, discrimination, bribery, fiduciary, corporate social responsibility etc. Usually it is supported by the law and business ethics also provide a framework for the business in order to gain public acceptance.

1.1 Explains the background and development of theoretical ethical approaches.

  • Teleological Theory of Ethics: The prime focus of this theory is related to the consequences of any action being taken and produces good outcomes. The theory basically suggests that the need to have a decision framework for developing the desired consequences and how the functions must be managed so as to achieve the same (Transparency and Ethics, 2014).

  • Deontology Theory: This theory provides insights to the outcomes of those actions which are not of prime importance but the moral justification of the action is important. Immanuel Kant developed this theory and proposed it is important to follow the duties properly and people should take any action with full sense of their duties and responsibilities are considered to be morally as well as ethically correct (Transparency and Ethics 2014).

  • Consequentiality Theory: This theory correlated the moral actions and the consequences of the decisions (Moore 2005). The outcome of an action might be favorable or unfavorable and can be good or bad.  

  • Natural Law Theory: It is a legal theory recognizing the morality and law as deeply related. Morality refers to difference between right and wrong whereas natural law believe that all the human laws are defined by morality and not by authority figures. Therefore our human nature guides us about the laws and to be in conformity with such laws. 

1.2 Compare and contrast absolute and relative theories

The absolute theory refers to the theory where rules are absolute and cannot changed and are universal. Whereas the relative theory is related to judgments and therefore are open to change. The absolute laws of morality are not subjected to change and are objective. But the relative morality is an opposite theory. Absolute means everything is universal and cannot be changed whereas the relative theory means that morality is subjected to change. According to the relative morality various cultures have various beliefs and people with different time periods will also have different perspective regarding morality. According to relative theory, individual person have their own set of the morality and their morality is subjective in nature and can be changed with personal opinions and can therefore be biased (Bunge, M., 2012).

1.3 A business person applies for a license to start a new business and is asked to pay a bribe to obtain the license. What would his response be if he applies (i) absolute ethics, and (ii) relative ethics?

In terms of the absolute ethics, the bribery act should not entertained and has a wrong meaning. The business person cannot re-define his duties based on the benefits which would be bought upon by the wrongdoer. He should not entertain the idea of bribery and should not indulge in offering or inviting bribes. 
On the basis of the relative ethics, the act of bribery can be considered as an acceptable modes of performing business operations and advancing the career growth. Under the theory of relative morality, the corruption practices can be advanced in order to obtain financial gains.

1.4 What is the meaning of ‘Corporate Social Responsibility’?  How could it affect the operations of a business?

Corporate Social Responsibility can be defined as the continuing commitment done by the business in order to behave ethically and to contribute towards the development of the company in financial terms along with improving the life of their workers and staff and taking into account the needs of their families. It also takes into account the well-being of the local community, environment and society.

1.6 Explain the ethical issues which may affect the way a business runs its operations with respect to:

  • (a) Advertising: The organization must treat their clients in a fair manner and their advertising audiences even more fairly. There is a need for the organization to create honest, socially desirable and non-misleading desirable advertisements. Furthermore, a useful, healthy, ethical services, products and ideas must be represented in order to be honest with the audiences. The organization needs to treat their suppliers, vendors, employees, management and the media in a fair and transparent manner. 

  • (b) Environment: The environmental ethics is usually concerned with the responsibility of the company in order to protect the environment that is being operated. The organization should not damage the governmental regulations which affect the ability of the business while conduction of their operations. The organization should focus on the environmental business ethics and correspond towards the governmental regulations in order to avoid any harm to the environment. 

  • (c) Customers: The organization should also presents the information in a transparent manner in order to maintain their reputation of trust. Therefore the organizations need to take a principle stand against the customers who behave in an unethical manner. A solid foundation of trust has to be maintained which results in solidification of reputation and can help making transactions easier. The set of values and principles must not be violated so as to engender the trust.

  • (d) Employees: All the employees must be treated equally in order to maintain the diversity of the workplace. The health of the company must be protected and sound decisions must be made in order to keep the employees safe. When the employees are not paid good wages, good working conditions, health benefits, the organization might face high employee turnover and employee dissatisfaction.  

Task 2

2.1 Explain how Tea industry is affected by ethical considerations

The tea industry is committed towards providing a high quality tea and further to provide unsurpassed tea drinking experience. The tea industry has been dealing with issues like quality compliance, ethical sourcing which include the health and safety and welfare standards. There is a need to mitigate the effects on the climate change. The issues of unsatisfied workers who are paid minimum wage as compared to the required living wage. Furthermore, the outdated structure of tea which makes the workers entirely dependent on their employers for almost every aspect of their lives leads to hampering the price and negotiation in wages. The organizations needs to make straightforward business sense in order to work together with the tea plantations for ensuring the quality supply as well as the security for the growers (Brian, K.  2008)

2.2 Evaluate the implications for a business and its stakeholders to operate ethically.

  • 1. Environment: The industry is facing problems related to the sites of raw material, ingredients, herbs, packaging etc. and the industry is also facing issues related to the health and safety practices of the labours. The monoculture plantations of the tea leaves has resulted in decreased biodiversity and increase in the pesticides content in the soil. The whole process is disrupting the functioning of the community and is damaging the environment. 

  • 2. Trading fairly: The ethical approach help in maximizing the profits and at the same time minimize the social impacts. However, the company is facing issues related to unfair and low wages and poor working conditions being provided to the labours. This had led to workers dissatisfaction and poor return investment to the shareholders. 

  • 3. Workplace relationships: The industry is failing towards maintaining a good relationships with their workers, labours and staff. This had led to a wide disrupt among the employees of the company and industry. The industry should aims towards forming a cohesive work groups with committed and satisfied employees leading the tea industry and the company to attain greater goals, greater productivity.

Options and actions for making operations ethical
The stakeholders needs to work on devising a plan for achieving ethical rules and standards and should also become a part of Ethical Tea Partnership (ETP). Further the organization and the whole industry needs to provide the health and nutrition to the children of their tea plant workers. Furthermore, it should work on the water and housing of their prime tea plant sites in order to provide their workers with best working and living conditions, which is the main cause of dissatisfaction among the employee. Lastly, there is need to tackle the issue of discrimination on the basis of wages and equal treatment to the workers.  The organization needs to work as a moral agent by committing to best quality, service, value and trust. 
Specific options and methods for making the operations more ethical

  • The organization needs to respect and provide fair treatment towards their customers, employees, vendors, community and organization;

  • All the dealings must be performed with utmost integrity with all their stakeholders;

  • Honest communications must be done with the stakeholders internally as well as externally;

  • It should hold high standards for the ethical behavior and personal accountability;

  • The stakeholders must have a clear communication of internal and external policies. 

Effect on stakeholders
The management must decide on the material and living condition of their workers along with wages. In order to produce high quality tea, attract right buyers, providing the workers with better living and working conditions, higher wages and to continue making profits, the management must make good ethical decisions. The management will make fair choices and represent collective social morals by understanding all issues mentioned above. 
The stakeholders and producers of the tea industry should try to comply and even supervise the compliance by their employees, directors, officers using the rules and regulations of the laws. The directors should also comply with fair dealings and supervise the same for their officers, customers, suppliers etc. Once the organization follows the following methods and options towards being more ethical, the employees will experience a boost in their morale and will lead to decreased turnover rate. Further, a clear and transparent communication channel will help in building up a good reputation for the company.  

2.4 Analyze the development of mechanisms for achieving employee involvement and empowerment

The best way to empower and involve is to connect the organizational change culture like total quality management, customer service initiatives, learning organizations and business process re-engineering. The organization provides tea quality training to their staff so as to engage the employees and at the same time generate the work quality. The organization adopts the strategy of improving the skills of their employees continuously in order to cultivate the trust and loyalty of the employees (Holden, L. 2001). This additionally has helped in engaging them towards the organization’s operations. The organization further tries to communicate their missions, goals and objectives with the employees giving a sense of consideration towards the employees. (Budhwar, P. 2000). 

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Conclusion

The ethical concerns are the moral judgment of what is right and what is wrong. Therefore, there is a need for the organizations to take decision in terms that do not harm any individual, group or environment. The organization should behave ethically and act as a moral agent and help the employees to take the right course of action.

References

  • Andreas, F. and Falkenberg, J. 2010. “Ethics in International Value  Chain Networks: The Case of Telenor in Bangladesh”. Journal of Business Ethics, 90, pp. 355-369

  • Brian, K.  2008. “Social and environmental responsibility of corporations”. [Online]. Available at:  http://www.eoearth.org/article/Social_and_environmental_responsibility_of_corporations  [Accessed on: 7th August 2014].

  • Bunge, M., 2012. Treatise on Basic Philosophy: Ethics: The Good and The Right (Vol. 8). Springer Science & Business Media.

  • Budhwar, P. 2000. Evaluating levels of strategic integration and devolvement of human resource management in the UK. Personnel Review, 29(2), pp.141-157.

  •  Conference Washington.

  • Carroll, A. B. 1999. Corporate Social Responsibility. Business and Society, 38(3), pp. 268-280.

  • Ethical screening of: Anglo American. 2012. http://www.ethicalconsumer.org/portals/0/downloads/anglo%20american%20example%20screening%20nov%202012.pdf [Accessed on: 7th August 2014].

  • Holden, L. 2001. ‘Chapter 13: Employee involvement and empowerment’, in “Human resource management: a contemporary approach”. Harlow: Pearson Education Limited.

  • Moore, A. D. 2005. Information Ethics: Privacy, Property, and Power. USA: University of Washington Press.

  • Oglesby, E. H. 2002. Ethical Issues that Matter: A New Method of Moral Discourse in Church Life.University Press of America.

  • Sheehan, C. 2005. A model for HRM strategic integration. Personnel Review, 32(2), pp.192-209.

  • Transparency and Ethics. 2014. [Online]. Available at: http://www.angloamerican.com/development/approach-and-policies/transparency-and-ethics/anti-corruption.aspx  [Accessed on: 7th August 2014].

  • Wilber, C. K. 1998. Economics, Ethics, and Public Policy. USA: Rowman& Littlefield.

  • Boulstridge, E. and Carrigan, M. 2000. Do consumers really care about corporate responsibility? Highlighting the attitude- behaviour gap. Journal of communication management, 4(4), pp. 355-368.

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